I’ve been told that back in the mainframe days, there was a saying that nobody ever got fired for buying IBM. The idea was that, even though IBM may not be the best choice for a given environment, it was always the safest choice. I suspect many deals went IBM’s way precisely because of this thought. Back then, who wanted to risk their career on something new and innovative?
For many years, the same could have probably been said for the big legacy players in credit union core data processing. You know who they all are. Just fill in the blank: No credit union CTO ever got fired for buying _____. As true as this may have been a few years ago, I’d argue that trying to play it safe today is extremely risky. Here are three reasons why.
Playing It Safe Is Expensive
In fact, it’s very expensive. Big legacy cores have big payrolls to cover, big investors to satisfy, and big infrastructures to pay for, so of course they have to charge you big money. It’s not just the exorbitant software license (for an on-premise solution) or outrageous per-member charge (for service bureau, which legacy cores are now probably calling “cloud”). I’ve talked to more than a few credit union executives who tell me they’ve grown wary of being “nickel and dimed” by their legacy core providers.
With today’s razor-thin margins, you can’t afford to be wasting money supporting some big corporation’s excesses. Now more than ever, you need to seek real value in a core processor.
Playing It Safe Slows You Down
I’ve heard credit union executives use a lot of words to describe their legacy core providers. Nimble has never been one of them. It’s not just their old technology that slows them down, though. It’s just as much a product of their bureaucracy. Changes happen slowly when they have to pass through 10 different committees in 10 different towns.
Comparing a big legacy core provider to a CUSO like Prodigy in terms of nimbleness and agility is like comparing a trans-oceanic cargo freighter to a power boat. We’re structured such that we’re always in a position to help you push forward rather than get in your way.
Playing It Safe Is Technologically Risky
It’s important to remember that some of these legacy cores are built on technology that’s 40 or 50 years old or even older. Consider that for just a moment. Think about the car you own today and how it compares technologically to a car that’s 50 years old. Sure, you could start adding modern upgrades to that 50-year-old car, but you’d always be stuck playing catch-up. And there’s a good chance you’d end up with a Franken-car.
It's not much different with core processing. Legacy cores can add all the middleware layers and more modernized components they want, but that will never serve your credit union as well as a core platform that was built natively on modern technology and delivered through a true cloud environment.
Could technology take such a sharp turn that all core processors are caught flat-footed? I think that’s highly unlikely. But even if it did, which do you think would adapt more quickly – the monolithic core with its 50-year-old technology or the nimble CUSO with its modern, cloud-based core platform?
I think you know the answer.
Amber Harsin is CEO of Prodigy CUSO.